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FDI

Presented By
Abhishek Kalla
WHAT IS FDI?
qFDI or Foreign Direct Investment is any form
of investment that earns interest in
enterprises which function outside of the
domestic territory of the investor.

qFDIs require a business relationship


between a parent company and its foreign
subsidiary. Foreign direct business
relationships give rise to multinational
corporations.
TYPES OF FDI
 Outward FDI
 Inward FDI
OUTWARD FDI
 An outward-bound FDI is backed by the
government against all types of associated
risks. This form of FDI is subject to tax
incentives as well as disincentives of various
forms. Risk coverage provided to the
domestic industries and subsidies granted to
the local firms stand in the way of outward
FDIs, which are also known as ‘direct
investments abroad’.
INWARD FDI
 Different economic factors encourage
inward FDIs. These include interest loans,
tax breaks, grants, subsidies, and the
removal of restrictions and limitations.
OTHER TYPE OF FDI’S
 Vertical Foreign Direct Investment
takes place when a multinational
corporation owns some shares of a
foreign enterprise, which supplies
input for it or uses the output
produced by the MNC.

 Horizontal foreign direct
investments happen when a
multinational company carries out a
similar business operation in different
nations.
TYPE OF FOREIGN DIRECT
INVESTORS

Øan individual;
Øa group of related individuals;
Øan incorporated or unincorporated entity;
Øa public company or private company;
Øa group of related enterprises;
Øa government body;
Øany combination of the above.

METHODS OF FDI
 The foreign direct investor may acquire 10% or
more of the voting power of an enterprise in an
economy through any of the following methods:
vBy incorporating a wholly owned subsidiary or
company.
vBy acquiring shares in an associated enterprise.
vThrough a merger or an acquisition of an
unrelated enterprise .
vParticipating in an equity joint venture with
another investor or enterprise .

FDI IN INDIA
 Ranked 3rd in Global FDI
 FDI inflow in India was US $3.5 Billion(July),
56% higher than USA
 India's FDI inflows touched about US$ 7.016
billion in the April-June,2009.
 Foreign Reserve of India as on 1st Jan.2010 is
US $283,521 Million(Rs.13,22,680 Crore)

Restricted Areas of FDI in
India
 Arms and ammunition
 Atomic Energy
 Coal and lignite
 Rail Transport
 Mining of metals like iron, manganese,
chrome, gypsum, sulfur, gold, diamonds,
copper, zinc